The benefits of building sustainable cities right

As urban migration increases in the developing world, nations are being encouraged to invest in coordinated urban development to avoid future problems

By Mahmoud Mohieldin
and Zoubida Allaoua /

Sun, Mar 03, 2013 - Page 9

The developing world is experiencing rapid urbanization, with the number of city dwellers set to reach 4 billion in 2030 — double its 2000 level. However, unplanned and uncoordinated urban development is risky, threatening to replace migrants’ hopes for a better life with unsanitary living conditions, joblessness and high exposure to natural disasters.

In many respects, urbanization is rational. After all, cities are the hubs of prosperity, where more than 80 percent of global economic activity is concentrated. Their density facilitates the delivery of public services, including education, healthcare and basic services.

Indeed, it costs US$0.70 to US$0.80 per cubic meter to provide piped water in urban areas, compared with US$2 in sparsely populated areas.

However, the high concentration of assets and people, especially in coastal areas, is an economic liability, with about US$3 trillion in assets at risk from natural hazards. Vulnerability will increase further over the next two decades, as cities triple their built-up land, to 600,000km, often without basic infrastructure or policies to prevent construction and settlement on disaster-prone and vulnerable sites.

To get urbanization right, policymakers must take urgent action to build sustainable cities. Through effective land-use management, they can provide reliable and affordable access to basic services, education, housing, transport and healthcare to growing urban populations, while minimizing the carbon footprint.

This entails, first and foremost, abandoning the perception of a trade-off between “building more cities” to accommodate rapid urban growth and “building cities right” to enhance social and environmental outcomes.

Evidence shows that building cities right generates near-term benefits, while reducing the longer-term costs associated with sprawl, congestion, pollution and climate change.

The alternative — building cities around a low-density, individual-vehicle transportation model — will leave urban planners struggling to increase density and develop public-transport systems later, a challenge that the US is currently facing.

A new World Bank report provides a practical agenda for building sustainable cities. The framework — which emerged from a three year effort to develop a foundation of credible facts and analysis from countries with diverse urban experiences, such as Uganda, China, India and South Korea — can help policymakers to understand the obstacles to urbanization and to identify politically, technically and fiscally feasible policy options.

This framework reflects three main aspects of urban development: planning, connecting and financing.

A major finding is that, regardless of the level or speed of urbanization, planning for land-use management should be the top priority. By clearly defining property rights and implementing effective land-use systems that are coordinated with infrastructure, particularly transport, policymakers can help cities to attract private investment, connect people with jobs, reduce environmental and social risks and decrease vulnerability to natural hazards.

With urban growth in developing countries likely to occur largely in secondary cities, the opportunity is still open (but closing fast) to shape urban design to ensure that, for example, residents do not spend half of each day commuting to and from work. While no single model for managing rapid urbanization exists, positive examples offer some guidance.

For example, Seoul’s population more than tripled from 1960 to 2000. South Korean policymakers, anticipating the challenges, strengthened institutions for valuing and pricing land, trained a cadre of appraisers to ensure transparency in the valuation process, and publicly disseminated land-value information. At the same time, the government supported construction of high-rise residential buildings capable of housing the growing urban population and developed multiple transport modes, including highways, rail networks and subway lines, which have helped to connect people with employment opportunities within and among cities.

Likewise, leaders in Singapore and Japan treated public transport as a crucial aspect of land-use plans. As a result, they boast some of the world’s lowest energy consumption as a share of GDP.

In order to encourage citizens to use public transport, policymakers in Tokyo reduced subsidies for private cars, so that driving one became five times costlier than using public transport. Complementary investment in high-speed inter-city transport has reduced travel times between Japan’s two largest agglomerations, Tokyo and Osaka, which are more than 500km apart, to less than two and a half hours, thus integrating labor and housing markets and enhancing productivity.

As these investments bolster economic growth, increased tax revenues would imply more sustainable financing, as would local governments’ ability to leverage land markets and approach local-currency debt markets.

In Mumbai, the auction of 13 hectares of land in the new financial center, the Bandra-Kurla Complex, generated US$1.2 billion. This amounts to more than 10 times the Mumbai Metropolitan Region Development Authority’s total expenditure in 2005 and six times the total value of municipal bonds issued by all local governments and utilities in India in more than a decade.

Similarly, in Istanbul, the auction of an old bus station and government building in 2007 generated US$1.5 billion — more than the city’s total expenditures and infrastructure investments in 2005. Colombia’s finance ministry has also developed Findeter, a bond bank that finances regional urban infrastructure projects by providing resources to financial intermediaries that allocate them to subnational authorities.

By building sustainable cities, policymakers can support social and economic development, while minimizing environmental damage. Managing urbanization as it occurs, rather than struggling to fix cities later, is an opportunity that developing-country leaders should not miss.

Mahmoud Mohieldin is managing director at the World Bank Group. Zoubida Allaoua is director of the World Bank’s Urban and Disaster Risk Management Department.